RBI has imposed a penalty of Rs 59.20 lakh on South Indian Bank for non-compliance with certain directions on 'interest rate on deposits' and 'customer service in banks'. The action from the central bank came on Friday (November 8) two months after it fined India's largest bank, HDFC, for Rs 1 crore in September this year for non-compliance with certain directions on 'interest rate on deposits', 'recovery agents engaged by banks' and 'customer service in banks'.
South Indian Bank is a major private-sector bank headquartered in Thrissur in Kerala. It has a market cap of Rs 6287 crore, as of November 8. A statutory inspection for supervisory evaluation of the bank was conducted by RBI with reference to its financial position as on March 31, 2023.
Based on supervisory findings of non-compliance with RBI directions and related correspondence, a notice was issued to South Indian Bank Limited. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found that the charges against the bank were sustained, warranting the imposition of a monetary penalty.
The RBI said the bank levied penal charges for non-maintenance of minimum balance/average minimum balance without notifying certain customers by SMS/e-mail or letter. South Indian Bank also marked lien against certain NRE savings deposit accounts, the central bank said.
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The RBI further said the penalty is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of the penalty is without prejudice to any other action that may be initiated by RBI against the bank, it added.
(With inputs from PTI)
